The solar industry has had a bumpy twelve months as supply chain disruptions, rising production costs, and labor shortages have hampered the sector, but there’s no denying its long-term exponential growth. Over the last decade, solar energy has witnessed an average annual growth rate of 49%. This phenomenal growth is due partly to strong federal policies like the Solar Investment Tax Credit, which provides a 30% tax credit on solar investments.
Another factor that is fueling growth in the industry is declining prices for solar components and installation. The cost of solar has plunged 90% over the past decade, along with falling equipment and infrastructure prices. An average-sized residential system has dropped from a price of $40,000 in 2010 to roughly $20,000 today.
The growth in solar is hardly restricted to the residential sector. Solar power has helped many Fortune 500 companies cut back on costs. Apple, Amazon, Target, and Walmart have all invested heavily in solar production at various locations around the country. Apple is leading the way with more than 390 MWs of commercial capacity, and Amazon is a close second with 329 MWs.
Solar power isn’t going anywhere anytime soon, so continued growth can be expected in the long term. Business Insights projects that the $163 billion global solar industry will reach $194.75 billion by 2027, exhibiting a CAGR of 6%. This article will compare some of the top solar investments available.
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The Invesco Solar ETF (TAN)
The Invesco Solar ETF is a great way to gain exposure to solar without investing in just one stock. The fund seeks to track the MAC Global Solar Energy Index and comprises about 35 individual components — including U.S. and international stocks. The fund follows a blended strategy, investing in value and growth stocks with various market caps.
TAN’s share price peaked in mid-February 2021 and has fallen 43% since. However, it could be an excellent opportunity to get in at a more attractive price, as growth in the solar industry will likely gain strength in the long term.
ETFs, by their nature, are often considered a less risky investment as they tend to be much less volatile than individual stocks. If you’re unsure about which solar stocks to buy and want to cut back on potential risk, TAN is a relatively safe way to add solar energy to your investment portfolio.
Canadian Solar Inc. (CSIQ)
Founded in 2001, Canadian Solar is a leading manufacturer of solar photovoltaic modules and a provider of solar energy solutions. CSIQ has delivered around 52 GW of solar modules to thousands of customers in more than 150 countries through the end of 2021, reaching approximately 13 million households. Canadian Solar derives roughly 47% of its revenue from Asia, 35% from the Americas, and 18% from Europe and everywhere else.
Canadian Solar is one of the most bankable companies in the solar and renewable energy industry, having been publicly listed on the NASDAQ since 2006. The company has the potential to advance in the upcoming months based on its continued business growth, favorable earnings, and revenue outlook.
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SolarEdge Technologies (SEDG)
Israel-based SolarEdge Technologies operates in more than 30 markets, providing inverters, optimizers, monitoring equipment & tools, and accessories for harvesting and converting solar energy.
SolarEdge technology is some of the most respected in the industry, mostly due to the fantastic job they’ve done in reinvesting in R&D. This is especially true when it comes to its inverters, where it is hands down the market leader. Its solar photovoltaic (PV) inverter systems are being installed in more than 133 countries across five continents. Climate change is an important global issue right now. SEDG share price will likely rise even more over the next few years as more residential and solar properties switch to solar power.
The current consensus among 35 polled analysts is to Buy SEDG stock. The 29 analysts offering 12-month price forecasts have a median target of $370, representing a 41% increase from its current price. SEDG is down 8% YTD.
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